Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
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Attorney general subpoenas home loan companies
Dayton Daily News - Saturday, November 10, 2007

COLUMBUS — Attorney General Marc Dann issued more than a dozen subpoenas late Friday to companies involved in the subprime lending industry.

The targets of the subpoenas and what information is being sought was not disclosed.

But Dann told reporters Thursday that the information is vital to an ongoing investigation into possible violations of the anti-trust laws, civil rights statutes and the Consumer Sales Practices Act.

Lenders declined to sign onto a deal with state officials to work with homeowners facing foreclosure to modify their loans. That prompted Dann to research legal actions and the Ohio Department of Commerce to pursue tougher regulations for lenders.

Subpoenas served over foreclosures
Saturday,  November 10, 2007 3:43 AM

Mortgage companies yesterday were served with subpoenas as the state of Ohio began seeking evidence of wrongdoing as part of a get-tough approach to dealing with the state's continuing foreclosure crisis.

The legal action made good on a vow by the state to go after lenders, whose wrongdoing officials blame for some of the foreclosure problems. This comes on the heels of the lenders' refusal this week to go along with a state plan to work out problem loans instead of foreclosing.

The subpoenas, numbering more than a dozen, were issued to "multiple companies in multiple levels of the industry" by the Ohio attorney general's office. They seek evidence of violations of antitrust, civil-rights and consumer-sales-practice laws.

Ted Hart, spokesman for Attorney General Marc Dann, said the state could not discuss the specifics of the requests in the subpoenas.

Meanwhile, an association representing some the nation's largest mortgage lenders called for a summit on the foreclosure crisis attended by its members, Gov. Ted Strickland and other state officials.

The call for a "frank and open dialogue" came from the Mortgage Bankers Association, a national group, and its Ohio counterpart.

Although no lender responded to Strickland's call to sign a "compact" promising to work out loans instead of foreclosing, the Ohio Mortgage Bankers Association this week offered an alternative plan on behalf of its members. Strickland said he rejected it because it did not come from individual banks and lacked specifics.

Strickland remains open to talking with the lenders, but a summit is not likely to happen, said Keith Dailey, a spokesman for the governor's office.

Dailey said the governor met with the 11 top subprime servicers in April and convened a foreclosure task force of government, financial-industry and nonprofit-sector representatives to address the state's growing housing crisis.

"Now is the time for action," Dailey said. "The trade association's request does not meet the standard of a serious and meaningful commitment to help more Ohioans stay in their homes."

This comes as thousands of Ohioans continue to lose their homes to foreclosure. The state ranked No. 5 in the nation based on the rate of foreclosure in the third quarter. A total of 46,818 homes went into foreclosure during that period, representing one foreclosure filing for every 107 households, according to RealtyTrac, an online marketplace for foreclosed properties.

Subprime loans generally have adjustable rates that rise a number of times, sometimes leaving consumers with mortgage payments that are hundreds of dollars a month more than when they first signed.

Washington Mutual, which is among the largest holders of subprime mortgages in Ohio, was among the lenders who refused to agree to Strickland's plan. The Seattle-based bank instead said it's helping consumers through the subprime-borrower program the bank began this spring to help prevent foreclosure, spokeswoman Libby Hutchinson said in an e-mail.

"We will continue to implement the borrower-assistance efforts we've had under way for many years," she said.

Although the Ohio bankers association said it regrets that it and its mortgage-servicing members "could not finalize a mutually acceptable compact agreement with Ohio officials ... progress has been made," Bill Cosgrove, the group's president, said in a statement.

Ohio is among a growing number of states that have increased efforts to investigate mortgage lenders.

The New York attorney general this week announced subpoenas to government-sponsored lenders Fannie Mae and Freddie Mac as part of that state's investigation of the mortgage industry's home appraisal practices.

But Ohio appears to be the first state to issue subpoenas directly to other subprime lenders.

"For large banking and securities matters, most states leave a lot of regulation to the federal government," said Alan C. Michaels, an Ohio State University law professor specializing in white-collar crime. "It is the exception, not the rule, for a state to take it on itself."

Information from the Associated Press was included in this story.

tturner@dispatch.com

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